Jim Covello, Goldman Sachs’s head of stock research, warned that building too much of what the world doesn’t need “typically ends badly.” Trip

Will A.I. Be a Bust? A Wall Street Skeptic Rings the Alarm.

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2024-09-24 14:30:05

Jim Covello, Goldman Sachs’s head of stock research, warned that building too much of what the world doesn’t need “typically ends badly.”

Tripp Mickle reported this article by visiting Goldman Sachs’s office in New York and attending its tech conference in San Francisco.

As Jim Covello’s car barreled up Highway 101 from San Jose to San Francisco this month, he counted the billboards about artificial intelligence. The nearly 40 signs he passed, including one that promoted something called Writer Enterprise AI and another for Speech AI, were fresh evidence, he thought, of an economic bubble.

Mr. Covello, the head of stock research at Goldman Sachs, has become Wall Street’s leading A.I. skeptic. Three months ago, he jolted markets with a research paper that challenged whether businesses would see a sufficient return on what by some estimates could be $1 trillion in A.I. spending in the coming years. He said generative artificial intelligence, which can summarize text and write software code, made so many mistakes that it was questionable whether it would ever reliably solve complex problems.

The Goldman paper landed days after a partner at Sequoia Capital, a venture firm, raised similar questions in a blog post about A.I. Their skepticism marked a turning point for A.I.-related stocks, leading to a reassessment of Wall Street’s hottest trade.